Buying CBD Adelaide

[onesixseros]

Hi folks. For a while now I've been following apartments in the CBD of Adelaide. I've only been looking at low-end scale for between 60K-90K.

They are 1 bedroom apartments, but essentially only two rooms (main area and bathroom).

They often are already tenanted and can produce some really good numbers.

a $69K apartment last year gave income of approx $6000 for the year.

Property will be paid off in 11 and a half years.

Apparently its a 9.25% return, better than anything a bank can offer on investment funds.

But what are your experiences with Adelaide CBD or other city metro apartments. Worthwhile or not worthwhile?

I'd likely purchase the property using a bank loan and concerned that would totally mess with the profits.

 

[RetireRich101]

what floor area in m2 are those apartments? There might be concerns from lending perspective. With such as low entry you may not need to borrow 70%, but when your property doubles or triples in the future, your buyer may need to borrow 80 or 90%. If lending rules apply for small floor threshold, then you're limited to sell to another person that has cash only.

 

[onesixseros]

what floor area in m2 are those apartments? There might be concerns from lending perspective. With such as low entry you may not need to borrow 70%, but when your property doubles or triples in the future, your buyer may need to borrow 80 or 90%. If lending rules apply for small floor threshold, then you're limited to sell to another person that has cash only.

22.69sqm

Didn't think there would be decrease in lending for smaller properties.

http://www.realestate.com.au/property-apartment-sa-adelaide-117155643

 

[Jamie M]

Hiya OP

Do a search on "serviced apartments" and you'll find heaps of info.

They rarely make for a good investment. There's usually bugger all growth and management fees can be quite high.

Banks don't like them either - you'd need a huge deposit for this one.

Cheers

Jamie

 

[D.T.]

22.69sqm

Didn't think there would be decrease in lending for smaller properties.

http://www.realestate.com.au/property-apartment-sa-adelaide-117155643

Anything under 50sqm is harder to lend on and unlikely to reval well in the future.

I'd also avoid the CBD area itself due to supply / demand. Most people are happy to rent there meaning not many owner occupiers are buying, therefore price isn't going anywhere.

Also you mentioned paying it off - dont do that. Go IO

 

[onesixseros]

Anything under 50sqm is harder to lend on and unlikely to reval well in the future.

I'd also avoid the CBD area itself due to supply / demand. Most people are happy to rent there meaning not many owner occupiers are buying, therefore price isn't going anywhere.

Also you mentioned paying it off - dont do that. Go IO

Thanks DT.. IO im guessing stands for "no loan" hehehe

 

[onesixseros]

Hiya OP

Do a search on "serviced apartments" and you'll find heaps of info.

They rarely make for a good investment. There's usually bugger all growth and management fees can be quite high.

Banks don't like them either - you'd need a huge deposit for this one.

Cheers

Jamie

Thanks Jamie, I think the $6000 is after all the fees.

 

[D.T.]

Thanks DT.. IO im guessing stands for "no loan" hehehe

No, interest only loan.

You can get legit places in adelaide for about the same money you know?
20% deposit needed on one of those units is 14k
14k would make an ok 5-10% deposit on something worth buying

 

[onesixseros]

No, interest only loan.

You can get legit places in adelaide for about the same money you know?
20% deposit needed on one of those units is 14k
14k would make an ok 5-10% deposit on something worth buying

between 60K-90K? that's elizabeth to gawler isnt it?